Shell goes solo in NW
Shelf sales pitch: Thursday 8 December 2005
December 08, 2005
THE partners in the North West
Shelf liquefied natural gas project may ditch their united
marketing program to individually promote their share of
While a united marketing approach had made sense until now, a
sellers' market for LNG could encourage some partners to
eventually go it alone, said Tim Warren, chairman of Shell
Australia, one of the six partners in the North West Shelf.
Shell is also a partner in the rival Gorgon LNG development, off
northwest Australia, where the three partners have agreed to
market their gas separately.
Shell will sell its share in the US, while ChevronTexaco
is dealing in Asia. ExxonMobil has yet to secure any deals but
is believed to be targeting the US.
Mr Warren said yesterday that the joint approach at the
North West Shelf, in place since 1989, had helped it secure the
massive $25 billion Chinese supply contract in 2002, but the
model had its disadvantages.
He said it could take a long time to agree on marketing
strategies and it was difficult to align sales with individual
"In equity selling, you each go into the market to achieve
your own objectives," Mr Warren said.
He said that the key to equity marketing was having
confidence in the ability of partners to secure sales deals.
Given strong demand in Asia and the US, he said, equity
marketing would become more prevalent.
The new strategy could be on the agenda at the Shelf if a
sixth processing train were built, or when the next major
marketing program came up.
But a sixth train may not eventuate until 2020, and Shelf
partners are already renegotiating long-term contracts that
expire in 2009.
Mr Warren said that the Chinese had been "caught off
guard" by rising LNG prices. But he expected that, having pulled
back from the market, the economic giant would eventually
In April, China National Offshore Oil Corp backed out of a
deal to buy LNG from Gorgon but was replaced by Japanese buyers.
Mr Warren said Shell was boosting its gas exploration
effort in Australia and had doubled its workforce in Perth.